Ukraine's backlog of about 20 million tons of grain can be exported, will the price of grain drop?

Less than 24 hours after Russia and Ukraine signed an agreement to restore grain shipments to Black Sea ports, Odessa Port, Ukraine's main export gateway for grain, was allegedly attacked suddenly.

According to the agreement signed by Russia and Ukraine on the 22nd, ships can resume the delivery of grain exports from three Black Sea ports including Odessa. The market cheered that "about 20 million tons of grain trapped in Ukraine will be able to be exported", but "Odessa" Dessa port attack" makes the agreement unnecessarily variable.

In this context, will Ukraine be able to export grain smoothly? Will 20 million tons of grain flow into the market help ease the crisis of rising global food prices?

China is also one of Ukraine's grain exporters. Will China's grain prices be affected?

The Global Times reporter conducted multiple investigations and interviews on this.

Solve Ukraine's urgent needs

Bloomberg reported on the 24th that the Ukrainian military said that Russian missiles attacked the port of Odessa a day after the two sides reached an agreement to restart grain exports.

Russia later said the attack targeted "military infrastructure." The Ukrainian Public Broadcasting Corporation reported that the Russian missiles did not cause major damage, the terminal loading and unloading capacity of the port of Odessa was not affected, and grain exports could continue.

On the 22nd, Russia and Ukraine signed agreements with Turkey and the United Nations in Istanbul respectively to solve the problem of food and fertilizer supply in the international market. The two countries have agreed to reopen Ukraine's Black Sea ports for food exports.

Immediately after the agreement was signed, international wheat prices plummeted, falling back to pre-Russian-Ukrainian levels. Under normal circumstances, 75% of Ukraine's grain production is exported, generating about 20% of the country's export revenue each year, according to a statement on the EU's official website.

Ukrainian grain exports are highly dependent on shipping, and before the conflict, grain and oilseed exports from Ukraine's Black Sea ports accounted for 90% of total exports. About a third of exports go to Europe, China and Africa.

Ukrainian President Volodymyr Zelensky said on the 22nd local time that after the signing of the agreement, Ukraine will be able to export about 20 million tons of grains harvested last year.

Ukrainian grain stocks are now worth about $10 billion.

Zhang Hong, a researcher at the Institute of Russian, Eastern Europe and Central Asia of the Chinese Academy of Social Sciences, told the Global Times reporter that the agreement can solve Ukraine's urgent economic needs. The export of 20 million tons of grain will bring a lot of income to Ukraine.

For West Asia, North Africa and other countries, Ukraine is about to export high-quality and cheap Ukrainian "soft wheat" (wheat with more starch and lower protein content), which they urgently need at present, which can alleviate the food crisis in the above-mentioned countries and regions. .

The grain transportation agreement also brought a turning point for the long-standing Russian-Ukrainian negotiations. The Itass news agency said on the 24th that Russian Foreign Minister Sergei Lavrov said on the same day that Russia does not object to restarting negotiations with Kyiv on issues other than food.

Odessa merchants: we have been preparing

The Ukrainian people welcomed the agreement signed between Russia and Ukraine. Andre, a local businessman engaged in the export of agricultural products in Odessa, told the Global Times reporter that he and his industry counterparts had already heard about the market rumors of signing this agreement and have been quietly preparing.

Andrei told reporters that he hoped that the agreement could transport the grain stocks in the warehouse as soon as possible because the new grain after the summer harvest has nowhere to be placed.

Statistics show that in the 2020-2021 agricultural year, Ukraine's grain exports exceeded 44 million tons. Therefore, Andrei and most local grain exporters estimate that if Ukraine can export the 20 million tons of grain in stock, it will make a profit of about 2 billion US dollars.

But Andrei, like everyone else, is worried about whether Ukrainian stocks of grain can be exported smoothly. It is reported that the agreement signed in Istanbul this time is to a large extent to ensure the safety of Ukraine's grain exports.

Ukraine's Deputy Agriculture Minister Vysotsky told DPA in June that if Russia's blockade of the Black Sea coastline is not completely lifted, Ukraine can only export up to 2 million tons of agricultural products per month.

Another question is whether Ukrainian farmers will have better economic income this year, not entirely dependent on the export of grain products.

Ukraine exports nearly 450,000 tons of meat every year. Among them, Saudi Arabia ranks first in the world in importing Ukrainian poultry meat, followed by the Netherlands, the United Arab Emirates, and Belarus. But Ukraine's gap in demand for animal feed and fertilizers is still widening rather than narrowing.

In the northern Ukrainian city of Chernihiv, local poultry farmer Kavin showed his farm to the Global Times reporter through a video. There are now a large number of empty stalls in the farm that could accommodate 5,000 broilers.

Cavan told reporters that the scale of the farm he contracted has shrunk by more than half in the past year, mainly because the grain cannot be traded and there is a lack of cash to buy animal feed. If the Russian-Ukrainian conflict cannot end within six months, he pessimistically expects the entire farm to be closed.

Who is driving up food prices?

Regarding Ukrainian grain exports, the West took the opportunity to get involved with China. "Lianhe Zaobao" said on the 24th that O'Brien, director of the U.S. State Department's Sanctions Coordination Office, accused China of hoarding food on the 22nd and hoped that China would release its food reserves to help solve the global food crisis.

Liu Pengyu, a spokesman for the Chinese embassy in the United States, said, “While the United States accused other countries of national grain and urged the release of grain, it did not reduce its own energy consumption from grain production at all, and even took the opportunity to raise grain prices for personal gain. responsibility".

Ma Wenfeng, a senior analyst at Oriental Egger Agricultural Consulting Co., Ltd., told the Global Times reporter that the conflict between Russia and Ukraine is not the only reason for the surge in global food prices. factor.

At the same time, the United States, Canada and other major grain countries have benefited a lot from this round of grain price hikes and are direct beneficiaries. "Western grain merchants are happy to see the conflict between Russia and Ukraine push up global grain prices."

The latest data from China's National Bureau of Statistics shows that the country's total summer grain output in 2022 will be 147.39 million tons (294.8 billion catties), an increase of 1.434 million tons (2.87 billion catties) or 1.0% over the previous year.

"Voice of America" said that although China is a big grain-producing country, it still needs to import a considerable amount of soybeans, wheat and corn from abroad every year. Data from China's General Administration of Customs shows that China will import 8.24 million tons of corn from Ukraine in 2021, mainly for feed processing.

Zhang Hong also told the "Global Times" reporter that if the conflict between Russia and Ukraine can be resolved peacefully, the pressure on global food prices will also be reduced, and there will be positive factors for China's imported agricultural products and the domestic feed industry.

In addition, from the perspective of the “Belt and Road” construction, the future agricultural cooperation between China and the countries along the “Belt and Road” is also one of the important directions for solving domestic food problems.